Collaboration Between Regional Financing Arrangements and the IMF

The Global Financial Safety Net (GFSN) has expanded considerably since 2008, including
in the non-traditional elements of the safety net such as Regional Financing
Arrangements (RFAs). The resulting multi-layered structure of the GFSN makes
collaboration between its various elements more important than in the past.
Specifically, stronger collaboration between the Fund and RFAs would help increase the
effective firepower of the GFSN and ensure a timely deployment of resources. The
Fund’s experience in macroeconomic adjustment and its universal risk pooling would
combine with the greater regional knowledge and country ownership brought the RFA.
In this way, improved collaboration between the Fund and RFAs, including in
co-financing, would significantly reduce the risk of contagion by encouraging countries
to seek early assistance from the Fund.

This paper is part of a broader set of proposals to fortify the GFSN (IMF, 2017b, c, d). It
proposes both modalities for collaboration—across capacity development, surveillance,
and lending—and some operational principles to help guide future co-lending between
the Fund and the various RFAs. To date, the only operational guidance to facilitate
collaboration has been limited to the high-level 2011 G20 Principles for Cooperation
between the IMF and RFAs. Building on several case studies and the principles derived
from them, this paper proposes an operational framework for future engagement. It
aims to start a more structured dialogue between the Fund and individual RFAs on the
modalities of how best to work together.